Rents listed are $2,350 for the cheapest unit, a bachelor, and up to $3,510 a month for a two-bedroom apartment. Condo buildings tower above older two and three-storey walk-up apartment buildings in Burnaby, B.C., on Dec. 18, 2024.DARRYL DYCK/The Canadian Press
The City of Vancouver will become a rental-apartment developer and landlord, in a new and unusual attempt to grapple with the local housing crisis.
The new initiative is aimed at developing at least five city-owned sites through a “pilot rezoning project,” with an application already in to their own department for two towers – one 54 storeys, the other 40 – comprising more than 1,100 apartments on a downtown site near the water.
The move is part of a new strategy of acquiring or building rentals and operating them as a way of making money for the city.
“By putting our real estate assets to work and thinking outside the box on housing solutions, we’re setting up Vancouver for long-term success,” Vancouver Mayor Ken Sim said in a news release announcing the move Thursday.
“We’re using city-owned land strategically to build much needed middle-income housing while generating funding for projects that make our city more vibrant for everyone without putting additional pressure on taxpayers.”
On another site, Vancouver bought an apartment building mid-construction in what was a “distress sale” by the builder for $38.5-million in late 2023 at 41st and Main.
The building, now completed and with a private liquor store on the ground floor, is being advertised for rent, with a free month as an inducement for new tenants, according to the rental-management company’s website.
Rents listed are $2,350 for the cheapest unit, a bachelor, and up to $3,510 a month for a two-bedroom apartment.
It’s unusual for a city to build its own market-rate apartments, although many cities in Canada and the U.S. have gotten involved in building below-market projects. Vancouver did a financial analysis to evaluate the long-term income potential from the proposed rental projects, but said it would not make that public at this time.
The new-development initiative is headed by deputy city manager Armin Amrolia, who used to be a senior bureaucrat at BC Housing. Housing builders and analysts are looking with interest at the policy.
The chair of the city’s Urban Development Institute, which represents many of Vancouver’s largest builders, said the city will likely be able to make some kind of profit because of its favourable position compared to private developers.
“The advantage the city has is they own the land. I’m sure the math works for them. They can always appear to be making money,” said Rick Ilich, also CEO of Townline, a company that has built thousands of condos, rental apartments and social-housing units.
But he also warned that development is difficult and there’s a risk that the city will end up having to hire a lot of new specialists to manage complex building projects.
“Good for them for trying to be part of the solution … but it’s complicated and time-consuming to build housing. I think they would do better to work with private industry. The last thing the city needs is to hire more staff.”
A University of British Columbia professor who specializes in housing was even more critical of the city’s decision to become its own developer.
Rather than governments owning entire projects, their role should be “to do the things the market can’t do,” said Tsur Somerville, a professor at the Sauder School of Business. “The government isn’t wired up to handle risk well.”
He said it would have been cleaner and more efficient to lease city land to a private developer, get its money upfront and avoid getting into the development business itself.
He also said the city’s efforts run the risk of creating an inequitable system because it can push its projects through quickly compared to private-sector ones.
Mr. Ilich ruefully agreed, saying he would love to see private projects move through the system as fast as the city’s first project appears to be going.
The city’s plans appear to emulate, in part, the province’s BC Builds initiative, a program that sees the province acting as a developer of market housing on various government sites.
It also follows from new policies aimed at maximizing city investments and assets.
The province’s housing ministry, in response to a query from The Globe and Mail, said it was interested in knowing more details, especially about the affordability or public benefits. It said the city has not put in a request to get low-cost financing from the province.
City council voted in the fall of 2023 to expand the mandate of the Vancouver Housing Development Office “to include middle-income housing on land that is owned by the city,” according to the policy document put out Thursday.
The Mayor’s budget task force also recommended “optimizing the city’s real-estate portfolio to create perpetual value and generate non-tax revenue.”